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Post-COVID-19 Appraisals and the Burden Of Proof in California Bankruptcy Cases

California Bankruptcy Burdens Of Proof and Effects on the Chapter 11 Process

Bankruptcy cases have been predicted to rise in the next 18 months following the outbreak of the COVID-19 pandemic. In an unprecedented financially stressing situation as has been caused by the economic impacts of government directives aimed at curbing the spread of the deadly disease, experts warn of an exponential increase in recorded bankruptcy cases.

California recently reopened its businesses after a long period of inactivity after the government instituted stiff measures to combat the spread of the virus. Almost a month following the reopening of the economy, businesses are still struggling to recover from the extended period of inactivity.

Others already opted to file for California bankruptcy protection to stay afloat amid the worsening COVID-19 situation. Economic experts now point out that bankruptcy appraisals are set to present a new challenge.

California bankruptcy law dictates that individuals and businesses filing for Chapter 13 or Chapter 11 protection provide sufficient proof to stand any real chance of securing such state protection. Thus the party with the burden of proof stands to lose out and carry its burden should it be denied the bankruptcy claim.

With the COVID-19 pandemic wreaking havoc all across the state; however, the bankruptcy judges and practitioners are set to experience unprecedented challenges in appraising the financial situation of bankruptcy applicants.

Real estate valuation is a critical part in the appraisals for eligibility to bankruptcy under the Bankruptcy Code. The market value has however been unstable for the better part of the first quarter of the year following the outbreak of the coronavirus pandemic. Moreover, the market

The task of appraising the financial value of assets in a bankruptcy case falls on the judges and practitioners. With the uncertainty caused by the economic impacts of COVID-19; however, this task is set to present a big challenge for the involved parties.

Comparable sales usually used to assess the validity of a claim by appraisers is also set to present a considerable challenge, given the instability of the market.